Autumn Budget: Bottom line is more costs for businesses

Normally we’d be pleased to hear the Chancellor of the Exchequer talking about warehouses in the House of Commons. Unfortunately, in her Budget Speech today, Rachel Reeves used the “warehouses of online giants” as a justification for imposing a business rates surcharge on properties valued above £500,000.

Clare Bottle, UKWA CEO, described the comment as a “cheap shot”. It was disappointing because the growth of online shopping has been driven by consumer demand, which the warehousing sector has responded to with agility. It was also disappointing because this tax increase hits all warehouses above the threshold, irrespective of sector.

As the Chancellor surely knows, warehouses handle everything from medicines to components for the defence industry, as well as the goods sold in high street shops that are being given a cut in business rates. It’s short-sighted of the Government not to realise that increased costs for warehouses will flow into increased costs of goods.

The Treasury is expecting to raise a staggering £270million from 1,900 warehouses between 2026-29 through this change. As a result, for many UKWA members, this will be seen as another cost-increasing budget.

The UKWA has been talking to the Treasury about this issue for months, arguing for transitional relief for businesses facing a steep increase in rates, and for further measures to make the business rates system less punishing for companies upgrading their premises.

The Budget does include £3.2bn of transitional relief, although it’s unclear how much of this will be accessible to warehouses. Separately, a new consultation has also been launched on business rates and investment, which the UKWA will be responding to.

Another measure in the Budget that may affect UKWA members was the removal of the exemption on customs duty for low value imports (less than £135). After the US and the EU took similar steps, it was looking likely the Chancellor would do this. We’d be interested to hear from members if you start to notice an impact.

There were positives in the Budget, particularly the introduction of VAT relief for business donations of goods to charity. We’d heard from members that VAT was a barrier to donating goods, and had urged the Treasury to take this action.

Also positive were some announcements around apprenticeships, including that the Government will start fully funding apprenticeships for under 25s in SMEs. The apprenticeship system has failed to fully deliver for the warehousing sector to date, so change is welcome. There’s more detail to come, which we’ll share with you in future updates.

Perhaps the best that can be said for today’s Budget was that there were no big new nasty surprises for business. However, for a sector like ours, which has a large workforce and needs to occupy large properties, the pressure will continue to be intense.